Canada shed more jobs than expected in November, while exports tumbled in October, suggesting the economy was off to a weak start in the final quarter of 2015 after just recently emerging from a mild recession. The country lost 35,700 jobs last month, Statistics Canada data showed on Friday, though the decline was mostly due to the erasure of a temporary boost the labour market had received from the general election in October.
"We're effectively back to square one," said Doug Porter, chief economist at BMO Capital Markets. The loss was led by a 32,500 decline in public administration jobs, which was nearly entirely accounted for by a gain in October driven by election hiring. The unemployment rate ticked up to 7.1 percent. Hiring did rise in manufacturing and construction, while natural resources managed a small gain. But the unemployment rate in Alberta, which has been hit hard by tumbling oil prices, jumped to 7 percent, the highest since April 2010.
The country's trade deficit unexpectedly climbed to C$2.76 billion ($2.08 billion) in October as exports to the US market dropped by the most in almost two-and-a-half years.
The Canadian dollar weakened against the greenback immediately after the reports. Overall exports dropped by 1.8 percent as volumes fell, with the declines widespread. Exports for September were also revised down.
The sector helped Canada pull out of recession in the third quarter and the deterioration bodes poorly for growth in the final months of the year, particularly after the economy shrank in September. "This one hurts because it further diminishes the prospects for GDP growth in the fourth quarter," said Jimmy Jean, senior economist at Desjardins. After international trade made a strong contribution to growth in the third quarter, it could penalise the economy in the current quarter, he said. "If we do get a contraction in Q4, a Bank of Canada cut could come into question."